by Brian Mahany
Our phone continues to ring every day with dual nationals and American taxpayers who recently learned that U.S. taxpayers must report all foreign accounts or face prison and loss of their funds. Most of my blog posts have centered on U.S. businessmen with hidden Swiss accounts and Americans with accounts in India, China and Israel. Perhaps the largest number of Americans with unreported accounts, however, are those living in Canada.
Unlike most developed nations, the United States requires all taxpayers to report their worldwide income. In most other countries taxpayers are only required to report what they earned in that country. Americans moving to Canada often have no idea they must still tell Uncle Sam about their Canadian accounts and income, even if they pay taxes in Canada.
Foreign reporting requirements are a very complex area of law. The U.S. has dozens of tax treaties with foreign governments including Canada. If you are an American living in Canada or a Canadian working in the U.S. or holding a green card, you are generally required to report your foreign income and accounts to the IRS. The penalties for not doing so are draconian – 50% of the value of your foreign account if the IRS finds your failure to report was “willful” and those penalties are for each year a violation occurs.
Failure to report foreign accounts is also a felony, although few people are prosecuted criminally.
Earlier this year the IRS held a foreign tax amnesty called the Offshore Voluntary Disclosure Initiative or “OVDI.” Although that program ended September 9th, the IRS will always entertain a so-called voluntary disclosure. If you are planning on coming into compliance, you really should have a tax attorney help you. CPA’s can help with most tax matters but when possible criminal tax charges and U.S. Tax Court may become involved, a lawyer is the better choice.
If you have unreported accounts in Canada or anywhere else, contact the tax attorneys at Mahany & Ertl. We have helped individuals and small businesses throughout the U.S. and beyond. For a confidential consultation and discussion about your matter, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services nationwide.